Free ISM INTE Practice Exam with Questions & Answers | Set: 5

The buyer should be most concerned about the risks associated with the shipping terms, especially as they take possession once the goods are loaded. This includes potential liabilities and loss during transit. Understanding these risks is critical for mitigating potential issues. Reference: Incoterms® 2020 by ICC.

For perishable goods, the balance between customer service and stockouts is crucial. Excess inventory leads to waste, while stockouts can harm customer satisfaction. The sourcing manager must carefully analyze demand patterns, inventory turnover, and customer expectations to optimize stocking levels. This consideration is supported by logistics and inventory management best practices, focusing on perishables and consumer satisfaction metrics.

Highlighting the risks of excess inventory and financial obligations due to optimistic forecasts is a compelling argument. It addresses financial impacts and supply chain efficiency, which are critical for decision-making in product launches. By presenting potential negative outcomes, the supply manager can influence the team to adopt more realistic projections. This approach is backed by supply chain risk management literature that emphasizes forecasting accuracy and inventory control.

In a highly competitive market like office supplies, the most critical cost associated with shortag-es is typically lost sales. If PQR, Inc. experiences shipping delays and cannot maintain continuous inventory, customers are likely to turn to competitors to meet their needs. This can result in im-mediate lost sales and potentially long-term loss of customer loyalty. The cost of lost sales often outweighs other costs like idle workers or production downtime because it directly affects revenue and market share. References:

•Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Op-eration. Pearson.

•Christopher, M. (2016). Logistics & Supply Chain Management. Pearson UK.

Expediting is most warranted for a purchase order that is past due, as it directly impacts operations and may cause delays in the production process. Ensuring timely delivery of overdue items is critical to maintaining supply chain efficiency. References: Expediting is used to resolve critical supply issues, especially for items that are essential and overdue.

Forming a process improvement team using quality management techniques is the first course of action. This team can analyze the root causes of errors in data entry, using systematic methods to identify and eliminate inaccuracies, thereby improving the accuracy of inventory records.

Outsourcing is required in May, June, and September to meet sales forecasts. Internal production is capped at 4,000 units per month, and inventory can buffer only up to 7,000 units. The high sales months exceed these capacities, necessitating additional outsourcing.

An increase in cost of goods sold while maintaining a constant average inventory value results in higher inventory turnover. This indicates improved efficiency in managing inventory relative to sales. References: Inventory management metrics highlight turnover as a critical measure of how effectively inventory is being utilized.

Access issues at the new warehouse can lead to increased delivery times and shipping costs, as drivers may face delays or require alternative routes. Resolving access problems is crucial for restoring efficient operations.

Utilizing a third-party logistics (3PL) provider specializing in liquid transport offers cost-effective shipping solutions without the need for significant capital investment in specialized equipment. This approach allows the company to focus on core activities while leveraging the expertise and infrastructure of the 3PL provider.